Multiple State Agencies Remain in Limbo

Oregon State Legislature sent this bulletin at 03/30/2016 10:13 AM PDT

Prior
to the start of every Legislative Assembly, the Department of Administrative
Services (DAS) releases its State
Agency Legislative Contact Directory. This document is very
useful for lawmakers, not least because it provides information on how to reach
department heads and their legislative liaisons to obtain assistance for
constituents who may be having problems with those agencies.

The
most recent edition of the directory was from just over a year ago, and is
dated January 9, 2015. Anyone hoping to use the current document will encounter
significant difficulty with regards to several agencies whose directors and
senior staff have been sacrificed amid continued controversy and public
outrage.

Steady
leadership is definitely needed at that agency. OHA continues to struggle with
significant legal issues, including ongoing lawsuits with Oracle regarding the
failed $300 million Cover Oregon debacle. The
agency is currently negotiating a lawsuit settlement
with Coordinated Care Organization (CCO) FamilyCare in an effort to avoid
losing nearly half a billion dollars in funding. OHA recently rejected a
settlement offer, prompting FamilyCare to file
a complaint and motion for a temporary restraining order against OHA. The
agency has given FamilyCare until April 5 to settle the dispute under threats
of finding it in breach of contract and moving its members to a different CCO.

OHA
must also deal with an anticipated budget shortfall of at least a half-billion
dollars for the 2017-19 biennium. The deficit will result largely from its
massive expansion of Oregon Health Plan Medicaid enrollment and the federal
government’s gradual drawdown of payments intended to cover the costs of Oregon
Medicaid expansions under Obamacare. The agency is also facing already
negotiated salary increases of around 30 percent for its more than 4,000
employees over the next four years, as well as likely annual one percent Public
Employee Retirement System (PERS) contribution increases for at least the next
six years. Significant additional cost increases related to the new minimum
wage law are certain to occur.

The
failed Cover Oregon private sector insurance exchange has been assigned to the
Department of Consumer and Business Services (DCBS). That agency chose to use
the “free” national Obamacare exchange to provide access to private health
insurance policies. We understand DCBS is now contemplating creating another
new Oregon state insurance exchange, because it seems apparent that the use of
the national exchange will not only not be “free” in the future, but may be
prohibitively expensive to use.

A
recent
poll conducted by the Portland
Business Journal shows that Oregonians are understandably reluctant to
pursue a state-run exchange, given the embarrassing history of expensive failures
that has occurred to date.

Moreover,
one of Oregon’s fastest growing and largest private health care insurers, Moda,
appears to be experiencing significant financial distress. Multiple cash
infusions from outside sources and double-digit annual insurance premium
increases have been required to maintain company solvency. Earlier this year, state
regulators put
the company under "supervision" due to those, and other,
concerns.

All
of this came after Oregon Health and Science University loaned
$50 million to Moda, a risky proposition that many people found to be both troubling
and questionable.

Earlier
this month, the new director of DHS fired
two of its top officials as news spread that a $20
million lawsuit has been filed against the agency
alleging that DHS caseworkers and top officials ignored the abuse of two
children by their foster parents for over two years. The agency’s chief
operating officer for the child welfare and self-sufficiency program and its
director of the child welfare program were abruptly terminated without
significant comment or explanation regarding their roles related to the most
recent DHS debacle. A separate $3.5
million lawsuit has also been filed, alleging that DHS
failed to protect a four-year-old girl at a foster home.

DHS
will also face significant budget difficulties in paying its nearly 8,000
employees related to the already negotiated near 30 percent salary increases,
increasing PERS contributions and the effects of the new minimum wage law. The
agency estimated $54 million in projected impacts for just two of its divisions
from the minimum wage increase set to take effect July 1.

Then
there’s the Department of Environmental Quality. Its director submitted
his resignation, effective March 15, following the
revelation that neighborhoods in Southeast Portland were being subjected to
pollution. A timeline submitted by the former director to Governor Brown about
the series of events was found to be in
direct contradiction to information contained in e-mails
obtained by press outlets through records requests.

The
Department of Energy is currently headed by its fifthdirectorin the past
five years. That agency is at the center of the storm of controversy regarding
its management of the Business Energy Tax Credits (BETC) program. I am a member
of a bipartisan, bicameral Department of Energy Oversight Committee appointed
by Senate President Peter Courtney (D-Salem) and Speaker of the House Tina
Kotek (D-Portland)to determine how
the BETC and other agency programs were allowed to stray so far from their
intended purposes.

The
director of the Department of Revenue (DOR) announced
his retirement last December, days after several
Republican legislators, including Rep. Whitsett and I, asked
state and federal officials to investigate the BETC program. The
agency’s staff were allegedly instructed to limit or forego audits of entities
with potential capital gains tax liabilities related to their purchase and sale
of BETCs. Estimates of the potential taxes that may never be collected range
around $20 million.

Governor
Brown fired
the director of the Employment Department earlier this year,
under the guise of concerns regarding security lapses stemming from the
agency’s computer systems. The outdated and inadequate status of the agency’s
computer systems has been public knowledge for at least a decade. The
legislative leadership has not only refused to fund computer upgrades for the
agency but has repeatedly “repurposed” money saved by the agency to help pay
for the much-needed new systems. I considered the former director to be one of
the most trustworthy and effective agency heads in the entire executive branch.

Last
fall, the director of the Department of State Lands (DSL) announced
her resignation. The agency is controlled of the State
Land Board, which is comprised of the state Governor, Treasurer and Secretary
of State. DSL’s regulatory expansion in recent years has been nothing short of
phenomenal.

In
my opinion, DSL has engaged in gross overreach regarding its Essential Salmonid
Habitat rulemaking, effectively expanding its regulatory influence from the
headwaters to the sea. Moreover, the agency’s intended expansion of removal and
fill permitting appears designed to seriously curtail or eliminate mining
anywhere near an Oregon stream. The agency even contemplated expanding its
emergency rulemaking efforts to broadly exclude the public from various state
properties in Lake County, to the exclusion of certain activities on all state
properties all of the time.

All
of this fits a particular pattern. Executive agency departments seems to ignore
significant problems for as long as possible, and action is only initiated when
the news media or public entities make a big deal about it.

Too
often, little is done to identify and address the cause of the problems. The
typical executive response has been to deny knowledge and responsibility,
remove or replace the head of the agency, and hope that the underlying issues
somehow solve themselves. That game of department-head musical chairs appears
likely to continue under Governor Brown’s tumultuous administration.

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